The Ninth Circuit issued a very interesting opinion last week about serial class action tolling in California state courts (for purposes of this post, let's just assume that "interesting" and "serial class action tolling" are phrases you would arguably use in a single sentence that did not also involve irony or sarcasm). In Hatfield v. Halifax PLC, et al. (May 8, 2009), the Ninth Circuit reviewed a district court decision in which the district court found that Plaintiff "Hatfield’s claims, brought eight-and-a-half years after her causes of action arose, were barred by California’s statutes of limitations, which are four years or less for each of Hatfield’s claims." (Slip op., at p. 5403.) On appeal, Hatfield argued, in part, that the "limitations period was tolled by the filing of a previous class action in New Jersey state court, making this action timely. (Id.)

First, the Ninth Circuit concluded that Hatfield, as an individual, was entitled to tolling from the filing of the New Jersey class action. (Slip op., at pp. 5412-15.) The Ninth Circuit then turned to the more difficult question of whether Hatfield could claim such tolling on behalf of class members that Hatfield sought to represent:

While there is no California precedent directly on point, based on closely analogous precedent, we see no reason why California’s equitable tolling doctrine would not also apply to the claims of its unnamed putative class members who, like Hatfield, are California residents. First, the California Supreme Court has indicated a general agreement with tolling in the class action context, going so far as to cite with approval the Supreme Court’s decision in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974). See Jolly v. Eli Lilly & Co., 751 P.2d 923, 934-35 (Cal. 1988). In American Pipe, the Supreme Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” 414 U.S. at 554. In Jolly, 751 P.2d 934-35, the California Supreme Court noted with approval the two major policies that underlie the American Pipe tolling rule, the first of which is most relevant here. That policy protects the class action device because, without it, potential class members would be induced to file protective actions to preserve their claims, thus depriving class actions of their ability to secure “efficiency and economy of litigation.” Id. at 935 (quoting American Pipe, 414 U.S. at 553). In Jolly, despite the endorsement of American Pipe, the court rejected its application under the facts of that case. Id. at 935-36.

Although the Clemens decision would foreclose application of American Pipe here, it does not dictate a similar rejection of California’s equitable tolling doctrine, especially as it applies to California’s own residents. Although the two types of tolling—equitable and American Pipe —overlap to some extent, see Becker, 277 Cal. Rptr. at 496, and even though California courts have treated them at times as interchangeable, they are not congruent. The Halifax Appellees themselves concede that “the equitable tolling applied to individual actions is distinct from American Pipe tolling.” They cite Newport v. Dell, Inc., No. CV-08-0096, 2008 WL 4347311, at *4 n.8 (D. Az. Aug. 21, 2008), a case decided shortly after Clemens, which stated that “[t]he class-action tolling discussed in American Pipe and Crown is a species of legal tolling, not equitable tolling.” Thus, by the Halifax Appellees’ own admission, Clemens, which only rejected the application of American Pipe tolling in a cross-jurisdictional action, does not affect the application of California’s equitable tolling doctrine, which covers situations beyond those covered by American Pipe. See McDonald v. Antelope Valley Cmty. Coll. Dist., 194 P.3d 1026, 1032 (Cal. 2008) (“[California’s equitable HATFIELD v. HALIFAX PLC tolling] may apply where one action stands to lessen the harm that is the subject of a potential second action; where administrative remedies must be exhausted before a second action can proceed; or where a first action, embarked upon in good faith, is found to be defective for some reason.”).

(Slip op., at pp. 5417-18.) The Court concluded that California would protect its own citizens with its equitable tolling doctrine ("California has a strong interest in providing a remedy for wrongs committed against its citizens"), but would not extend that same equitable tolling protection to individuals outside of California.

As a final observation, the Ninth Circuit also offered a useful comment on the extent of tolling that is available under American Pipe:

Although American Pipe is clearly applicable to individual actions, some federal decisions have refused to allow the doctrine to toll the limitations period for subsequently filed class actions. See Robbin v. Fluor Corp., 835 F.2d 213, 214 (9th Cir. 1987) (“We agree with the Second Circuit that to extend tolling to class actions ‘tests the outer limits of the American Pipe doctrine and . . . falls beyond its carefully crafted parameters into the range of abusive options.’ ” (quoting Korwek v. Hunt, 827 F.2d 874, 879 (2d Cir. 1987) (alteration in original))). In Catholic Social Services, Inc. v. INS, 232 F.3d 1139, 1149 (9th Cir. 2000) (en banc), however, the Ninth Circuit extended American Pipe to toll the claims of an entire class where “[p]laintiffs . . . are not attempting to relitigate an earlier denial of class certification, or to correct a procedural deficiency in an earlier would-be class.” Whether the subject class action was actually trying to relitigate the certification issue was disputed by one of the dissents. Id. at 1157-58 (Graber, J., dissenting in part). However, the current action is clearly not an instance in which Hatfield is trying to reargue a denial of class certification because of a failure to meet Rule 23 of the Federal Rules of Civil Procedure or its state counterpart. Rather, the previous class action was dismissed for lack of in personam jurisdiction. Thus, if Hatfield had brought the original class action in California, American Pipe would permit tolling for the entire class action.

The Complex Litigator

The Complex Litigator reports on developments in related areas of class action and complex litigation. It is a resource for legal professionals to use as a tool for examining different viewpoints related to changing legal precedent. H. Scott Leviant is the editor-in-chief and primary author of The Complex Litigator.